Vnesheconombank published consolidated financial statements of the VEB Group for the twelve-month period of 2016 as prepared in compliance with IFRS.
“Last year was a year of laying solid foundation for further stages of the three-year transformation plan of the Group. Major tasks of the anticrisis management stage were maintaining VEB’s activity as a main development institute of Russia and timely fulfillment of its obligations, and they were accomplished. In spite of the fact that it was a pretty difficult year for us, we completed it with a better result than expected previously with regard to P&L and liquidity”, First deputy Chairman Member of the Board Nikolay Tsekhomskiy said.
The VEB Group’s key performance indicators are as follows:
- In 2016 the VEB’s Group equity increased by RUB 74.9 billion (+15.6%) to reach RUB 555.7 billion as at 31.12.2016. VEB’s capital adequacy ratio (RAS) as at 31.12.2016 amounted to 11.6%.
- Alongside with the subsidies from the federal budget provided in 2016 in the amount of RUB 150 billion as compensation of costs related to servicing foreign capital markets borrowings,
- the increase in capital is also attributable to the previous recognition as additional paid-in capital of subsidies in the total amount of 13.8 billion to the Bank’s subsidiaries (the Fund for Development of Far East region, Russian Export Centre, North Caucasus Development Corporation);
- positive balance of an unrealized revaluation of securities also had a positive effect on the VEB’s equity.
- When auditing the VEB Group’s assets in 2016 the Group took a conservative approach to its provisioning policy. Provisioning for the loan portfolio reached RUB 488.7 billion which affected both the net loan portfolio of the Group and its financial results for 2016 (a loss of RUB 111.9 billion).
However provisions in the amount of RUB 182.9 rubles (out of RUB 488.7 billion) were made for the assets which restructuring lead to recognition of the respective gain in other operating income due to IFRS specifics.
On the whole the Group performed large-scale work on the loan portfolio which not only resulted in its quality improvement but also brought net interest income increase by 33% to RUB 89.1 billion.
- The VEB Group’s assets decreased by RUB 809.0 billion (-18.5%) to RUB 3 573.4 billion. It was mainly caused by a RUB 675.8 billion (-26.2%) decrease in the customer loan portfolio to RUB 1 904.5 billion mostly due to a stronger ruble and corresponding revaluation of loans denominated in foreign currency.
- Total liabilities went down by RUB 883.9 billion (-22.7%) to RUB 3 018 billion due to a decline in the amounts due to credit institutions and the Government and the Bank of Russia in the total amount of RUB 528 billion. Inter alia loans and other placements from OECD-banks were repaid at a high pace, decreasing drastically by 49.5% to RUB 211.3 billion. The ruble strengthening also led to a decrease in foreign currency-denominated liabilities.
- The Group reached a comfortable liquidity position by the end of 2016, with the following factors contributing:
- 8.7% growth in cash and cash equivalents to RUB 350.1 billion;
- 20.3% growth in investment financial assets available for sale to RUB 470.3 billion;
- 35.1% growth in amounts due from banks and treasury to RUB 92.3 billion.
In 2016 a new development Strategy 2021 was adopted. The Group focused its efforts on streamlining and aligning systems and processes to the VEB’s strategy and values. A centre of expertise and project financing is being elaborated on the basis of for further development of the real sector of the Russian economy.